HONIARA, 27 FEBRUARY 2020 (SOLOMON STAR) —Solomon Islands Ministry of Finance and Treasury has rejected media reports linked to the US$100 billion financing introduced by the promoter of the financing proposal Terry Wong.
In an issued statement on Wednesday, the Ministry said what has transpired and the intention of the correspondences between Harry Kuma and Wong is to collate necessary and accurate information from the promoter.
This came after he (Wong) approached Kuma who as the Minister of Finance and Treasury, has the legal mandate in so far as government borrowing or guarantees is concerned under the Public Finances Management Act 2013 (PFMA).
The statement said that given the development challenges and needs of the government as prescribe under the Policy Implementation Framework of the Government outlined in the 2020 Budget Strategy and along with the mandated power of the Minister of Finance and Treasury under the above mentioned Act, consultation with prospective financiers is a standard component of due process to identify potential funding sources which by no means places public finances at risk, the statement highlighted.
The statement further clarified that in fulfilling these obligations, the purported correspondences that was prematurely leaked to mainstream media was nothing more than a written request to provide accurate and more detailed information of the proposal, for purposes of investigation to warrant further assessment and not an attempt to secure a loan or other forms of financing which would incur unnecessary liability on public finances.
“This is not the first time such an offer has reached the Ministry of Government.
“In 2014, the government also received a similar proposal but after assessing the offer, the government had anonymously rejected the funding,” the statement revealed.
The Minister also complied with proper procedure to seek advice from the Debt Management Advisory Committee or DMAC, after receiving some information from the promoter.
DMAC met on 07 January 2020, as required under the PFMA, to assess the proposal as requested by the Minister.
The proposed funding is the largest ever dealt with by DMAC and the material evidence provided was insufficient to make a firm recommendation to the Minister.
It was further revealed that the position of DMAC is to carry out a full due diligence assessment on the offer andWong as the promoter, in order to ascertain the authenticity and viability of the proposal. Since the DMAC assessment was made nothing has been progressed.
“As a responsible government, we cannot accept loan funding that is not affordable and is careful to only accept loans that will generate returns which the government has the capacity to repay” the statement explained.
Furthermore, the statement also confirmed the government is aware that any financial commitment should not undermine the country’s sovereignty or cause any adverse impact on the economy which includes inflationary risks.
Contrary to media speculation, these are areas of concern to the government which the current SIG Debt Management system is designed to safeguard, the Ministry said.
The government assures that Solomon Islands borrowing is well managed and guided according to the PFMA and Debt Management framework and the Ministry of Finance and Treasury is operating a robust and resilient debt management system which is based on global debt management modules and cannot accept any borrowing that is beyond our capacity to service.
SIG National Debt portfolio has not recorded a single loan from PRC.
“It’s important to note that our SIG debt is well within the affordable and sustainable level and the threshold has not been breached to date.
Meanwhile, the leader of Opposition Matthew Wale is questioning the lack of any responses from Prime Minister Sogavare to explain why he directed his Finance Minister to pursue the US$100 billion loan proposal by Terry Wong.
Wale said, “On this matter, Sogavare’s silence is deafening”. It is clear the Finance Minister is acting on directions from Prime Minister Sogavare in this matter.
Wale said he is very concerned that the Prime Minister did not request help from the PRC government to assist in performing due diligence on the promoter of this loan proposal Terry Wong.
Local media reported PRC Officials saying they checked the address of the promoter Terry Wong but only discovered an apartment.
Wale said, “It is highly irregular that a so-called Funds manager would be operating out of an apartment. There isn’t anybody in China that is not known to the PRC government. The PRC government would know anyone capable of organizing US$100 billion to offer to a foreign government.”
Wale said, “I am not surprised by Sogavare’s attraction to the U$100 billion loan proposal, even if it seems too good to be true. The sheer size of the loan amount did not put off PM Sogavare from pursuing the loan proposal. The likely consequences on the Solomon Islands and future generations for many years to come did not put off PM Soavare from pursuing this loan proposal. It is in his nature to fall for quick-fix schemes.
In his previous terms as Prime Minister, he also forced the then Governor of Central Bank to sign letters of guarantee worth US$500million. The Solomon Islands were only saved by the Governor refusing to be part of any such con-schemes. PM Sogavare has also pinned his hopes on the sale of iron bars from the Malaita Outer Islands to raise enough money to solve the country’s economic problems. Previously, he ordered the police to dig for gold at Tulagi for a number of years. This is the character of the man. It is highly irresponsible.” Wale said, “The government is being led by an opportunistic superstitious treasure hunter.”
Wale said, “The Solomon Islands is facing a number of challenges that require rational policy responses that are realistic and reasonable. No amount of superstitious treasure hunting is going to address the challenges facing Solomon Islands.” The Prime Minister must not put his hopes in getting rich quick schemes as a solution to Solomon Islands’ development challenges.
He said the US$100 billion loan proposal is a testament to the warped sense of judgment of Prime Minister Sogavare. MPs within the government ought to reflect on this in light of the challenges facing the Solomon Islands, he said…..PACNEWS